Disability Insurance Sales Reinvented

There are many ways to purchase a policy. Before the advent of the internet, people who wanted to buy disability insurance met with their local agent, who presented them with a quote, and a couple of months later, the client had the policy to protect their income. Since insurance began being sold online, this process has been reinvented. 

Online sales have allowed clients to search for multiple quotes, all without leaving their computers. Similarly, agents can now provide advice over the phone and via email. The internet has allowed consumers to get much more information in a much shorter period of time. 

The successful agent has had to become even more informed about consumer options because they know that if they are not, the consumer will simply find someone else with a click of the mouse. Like most things, online competition has made for a better experience for consumers.

Access to Discounts is Our Edge!

Part of this better experience is finding the policy the consumer wants at the most competitive price.

Since every agent uses the same company-provided quote software, we should all be quoting the same price to you. Unless one agent knows how to get the client a discount that the other agent doesn’t know about. While every disability insurance policy has standardized pricing for all agents appointed to sell it, some agents are better at helping their clients secure a company-approved discount on the policy.

Association Discounts

Several professional associations endorse a company's disability insurance product, resulting in a discount for all their members. These discounts are usually 10% of the standard pricing. Typically, these associations are found in the medical, legal, accounting, and other professional fields. 

To take advantage of one of these association discounts, the insured needs to be a dues-paying member and be able to demonstrate this to the insurance company at the time of application. Typically, the discount applied to the disability insurance policy will remain, even if the insured terminates their membership with the association at a later date. 

It’s important to understand that association discounts on individual disability insurance plans are not the same as buying a policy sponsored by the association. Some professional associations offer a policy that they sponsor for their members. These policies are provided by an insurance company with a relationship with the association and usually do not include the same provisions as individual disability insurance plans.

Professional Group Discounts

A professional group is simply a number of employees at a single company that is applying for disability insurance with an insurance carrier. Usually, at least 3 employees are required to receive a discount of approximately 10%. 

The employees apply for and pay for their own policies, which are fully medically and financially underwritten. Therefore, they may be denied coverage, which may affect the rest of the group's discount. 

A good agent will usually talk with their client about any other possible interest at the client’s place of employment to help their client save money through this discount. If you are applying for disability insurance, it could be worth your time to ask around at work to see if anyone else is interested.

Qualified Sick Pay Plans

The best way to get a discount on your policy, especially if you are a woman, is to have your employer pay for the coverage. If you are a business owner, buying a policy for yourself and a couple of your employees may save you a lot of money. 

A Qualified Sick Pay Plan is simply a formal arrangement between an employer and employee to provide income replacement in the event of a disability. This income replacement is typically provided through a disability insurance policy purchased on behalf of some or all of the employees.

A little-known fact is that rates for DI for women are higher than for men. This has to do with the morbidity experience of the insurance companies. Anecdotally, female rates for life policies are less than male rates, as the mortality experience for women is lower. The QSPP discount is not only 10% but also offers unisex rates. This can amount to a savings of up to 30%-40% for insured women. 

A good agent working with a female business owner is smart to ask if she wants to offer coverage to select employees as well. If she does, the premium on her individual policy could be substantially lower than what she would have paid on her own. 

Non-Smoker

There is also a lower premium for non-smokers. While this is fairly well known, what is lesser known is that if you do smoke and do not qualify for this lower rate, you may still be able to get it in the future should you stop smoking. Most insurance carriers will apply the non-smoker rate to a policy that is in force if the insured can demonstrate that they have not smoked for twelve months and if their blood work indicates no nicotine is present. 

Medical Resident Discounts

Medical residents may be eligible for a discount on disability coverage, but they may also face special limits on the amount of coverage available to them. These discounts are set by agents who have a relationship with the hospital. The agent typically presents to residents each year to explain the importance of protecting their income and the benefits of buying a policy through the residency discount program. 

A residency program typically offers a 10% discount.

Most insurance companies will offer a starting monthly benefit of $5,000 to medical residents, regardless of their current income. This $5,000 can be increased once the residents graduate and start earning more income. The discount applied to the original policy is maintained for any subsequent purchases, so buying through a residency discount program is a good value for those who have access to it. 

Summary

Companies set the pricing of their disability insurance policies, and once approved by the state insurance commissioner, this pricing cannot be changed by the agent. The advent of the internet has enabled much faster, more efficient shopping for policies; thus, agents who sell DI policies online must be knowledgeable about the products and how to buy them at the lowest possible cost. 

It is critical to work with someone who specializes in the sale of disability insurance and knows how to maneuver through the various options to get all applicable discounts available to you. The best agents have databases of these discounts and are always presenting clients with options to reduce costs whenever possible. If you’re shopping for a policy and only seeing a standard quote, be sure to ask about any discounts that may be available.

This material contains the current opinions of the author, but not necessarily those of Guardian or its subsidiaries, and such opinions are subject to change without notice.